PETRONAS Carves Role as a Pioneer in Southeast Asia's Offshore EOR

Southeast Asia’s largest offshore Enhanced Oil Recovery (EOR) project, costing $2.5 billion, became operational at Malaysia’s Tapis field in September 2014, marking the culmination of a three decade-long journey for the country’s national oil company (NOC) Petroliam Nasional Berhad (PETRONAS).

The firm became interested in EOR in 1986 when a study was made for Malaysian oilfields. But another decade passed before the first EOR evaluation took place at the Dulang field offshore Terengganu. In 2002, PETRONAS designated EOR as a strategic project, a move enabling the initiative to secure the necessary direction and funding, paving the way to realize the Tapis project.

The Tapis project, undertaken by PETRONAS Carigali Sdn Bhd and ExxonMobil Exploration and Production Malaysia Inc. in a 50:50 joint venture, is also one of the world’s largest water alternating gas (WAG) offshore EOR developments.

The Tapis project facilities, including a new riser platform (Tapis Q) and a new central processing platform (Tapis R), were fully designed and built in Malaysia by local contractors. WAG injection from Tapis R to targeted wells on the existing Tapis A platform commenced in September 2014 and with WAG EOR, the Tapis field life would be extended for at least another 30 years, to beyond 2040.

Tapis field has been in operation since 1978, producing around 400 million barrels of oil, with peak production of 80,000 to 90,000 barrels per day (bpd) achieved in the early 1980s. Current production stands at 4,000 to 5,000 bpd.

PETRONAS plans to tap another 750 million to 1 billion barrels of oil from a dozen local fields now being studied for EOR projects. These include the Guntong project in partnership with ExxonMobil, fields in the Baram Delta Operations and North Sabah with Royal Dutch Shell plc, as well as the company-operated projects at Dulang, Angsi and Semarang.

Some of these projects, like Tapis, are already operational, while others such as Baronia have commenced fabrication and approval for the others are pending given the state of the current oil market.

“EOR projects are not cheap, they are cost-intensive so we have to ensure that we de-risk the project to a proper level and that we know what the results are at the end of the day. We have to mitigate the risk no matter what the oil prices are,” Dr. Nasir Darman, Head of Technology at PETRONAS Upstream explained.

He stressed the importance of balancing profitability and the strategic nature of the project, and highlighted three critical factors – covering the technical and commercial aspects of a project and capability building – for EOR projects to succeed.

“One has to solve all issues relating to EOR, from A to Z and it’s not easy because it involves injecting something alien or unfamiliar into the field and when you do that, you have to predict the side effects. We don’t just have to ensure it produces oil but that the reservoir is not damaged, and at the same time also address how the oil is to be handled at the surface.”

“From the commercial standpoint we want to ensure that everyone goes to the bank smiling. So the cake needs to be cut fairly for all parties,” Nasir said, adding that the “Malaysian Government has given tax incentives … to encourage more EOR projects and PETRONAS has provided a lot of facilitation for PS contractors and new PSC arrangements to make it attractive for the partners”.

Nasir also emphasized that education and capability building were key to the success of the EOR initiative.

“We sent our people for training and attachment, and this is where the relationship with universities and research institutions outside Malaysia is important … we need that collaboration in order to develop capabilities,” he commented, adding that the EOR team now has 500 staff.

PETRONAS partnered foreign institutions such as Houston University, University of Texas in Austin, Herriot-Watt University in the UK, Delft University of Technology in the Netherlands as well as local ones like the Universiti Teknologi PETRONAS and Universiti Teknologi Malaysia.

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